RAM Ratings reaffirms Litrak’s RM1.45b Sukuk

File pic of vehicles approaching the toll plaza on the LDP near Bandar Sunway.

KUALA LUMPUR: RAM Ratings Services Bhd has reaffirmed the AA2/Stable ratings of Lingkaran Trans Kota Sdn Bhd’s (Litrak) Sukuk Musharakah IMTN I and II Programmes (2008/2023) with a combined value of up to RM1.45bil. 

It said the ratings reflect Lebuhraya Damansara-Puchong’s (LDP) robust traffic profile, underscored by its strategic alignment through major townships, which supports its strong debt-servicing capability.

The ratings agency pointed out that as expected, a 31% increase in LDP toll rates for all vehicle classes (except Class 5, which remained at RM1.60), effective Oct 15, 2015, had resulted in traffic contracting by 1.89% in FY March 2016.

The average daily traffic (ADT) on the highway slipped to 467,317 vehicles compared with 476,299 the previous year. 

Subsequent monthly vehicle numbers, however, indicate that traffic is gradually recovering to pre-rate hike levels. 

However, RAM Ratings expected the ADT to remain strong throughout the tenure of the Sukuk at an average of 405,000 vehicles under its stressed case, “despite the inclusion of another rate hike and potential traffic diversion owing to competing infrastructure and proposed highways”.

It added that sensitised cashflow analysis indicated that Litrak will preserve its strong cashflow-generating ability, with an average projected annual pre-financing cashflow of about RM215mil throughout the Sukuk’s tenure. 

This translates into solid debt coverage, enabling the company to maintain a strong finance service coverage ratio of at least two times (with cash balances, post-distribution and calculated on principal repayment dates) over the same period. 

“In view of the company’s lumpy repayment schedule ahead, any distribution beyond our expectation would need to be supported by traffic and cashflow outperformance. 

“Elsewhere, as with most concession-related projects, Litrak is inherently exposed to regulatory and single-project risks,” it said.